Energy revenue for infrastructure: A ‘natural link’?

As Congress continues to hunt for ever-elusive money to rebuild roads, bridges and transit systems, House Republicans are likely once again to turn to black gold.

In the tax-averse and conservative-heavy conference, transportation interest groups’ ideas about raising the gasoline tax or looking at distance-based fees are a tough sell. But expanding oil and gas drilling and using those revenues for infrastructure improvements represent what Speaker John Boehner has called a “natural link.”

Text Size

-

+

reset

On the other hand, that idea could threaten the bipartisan spring for Congress’s transportation committees, where House Transportation and Infrastructure Chairman Bill Shuster (R-Pa.) and Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) are singing each other’s praises. The harmony could fade if Congress takes another crack at linking infrastructure and energy production ahead of the 2014 transportation bill deadline.

The House tried the controversial issue when tackling the previous transportation bill in 2012.

Is it a conflict worth fighting? Only if the energy revenues can bring in enough money to stabilize the Highway Trust Fund, which faces yearly shortfalls approaching $15 billion, said one influential transportation lobbyist.

“If you can’t come up with some sort of guaranteed level of revenue that will actually make the Highway Trust Fund solvent, you could end up with a really divisive battle,” the lobbyist said.

There is broad disagreement over how much money expanded drilling in the Gulf of Mexico, the Atlantic and Pacific oceans and the Arctic National Wildlife Refuge could bring. The House tried to link a package of energy bills to the previous transportation bill, but the infrastructure component crumbled as the energy bills passed the chamber, drawing 20 Democrats in support.

The House legislation also barely scratched the surface of the amount of money lawmakers are looking for. The Congressional Budget Office estimated the bills would bring about $4.3 billion over 10 years. House leaders are certain that’s too low.

“The CBO killed us on that,” Shuster told a gathering of state transportation experts last month. “I’ve talked to a number of experts that said it’s much larger.”

The idea has legs above Shuster’s head.

“Boehner still likes the idea,” a spokesman for the speaker said, as does Republican Policy Committee Chairman James Lankford (R-Okla.). Former Transportation and Infrastructure Committee member Lankford said his chamber is probably going to try again to link energy and transportation, and he agreed the CBO’s estimates were “very low.”

The Institute for Energy Research and Louisiana State University professor Joseph Mason have also criticized CBO for “lowball” estimates, including an August CBO report that ventured beyond the 10-year window CBO used for the House legislation.

The August report estimated that from 2023 to 2035, ANWR royalties would range from $2 billion to $4 billion per year, calling that number a “very uncertain” estimate. But that money wouldn’t be available immediately. And even if it were, it would pay for only a fraction of the money the federal transportation program will need annually beginning in 2014.

If the House were to reintroduce the energy package it passed in 2012, there is nothing to indicate that the CBO’s score would change since the energy exploration revenues remain gripped by the same uncertainty and risk.

“Everyone knows there’s more energy out there than CBO is giving them credit for,” the transportation lobbyist said. “But CBO has to make conservative predictions.”